Financial Institutions, Markets, and Money, Eleventh Edition

Glossary

accredited investors Individuals who are considered to be sophisticated investors and who do not need the protection afforded to regular investors by the securities laws.

actual reserves The reserve amount computed by a bank by summing its holdings of vault cash with its holdings of reserve deposits at Federal Reserve banks over a 2-week reserve maintenance period.

adjustable-rate mortgage (ARM) Mortgages on which the contractual interest rate changes when market rates change.

adjustable-rate preferred stock Preferred stock issued with adjustable rates; the dividends are adjusted periodically in response to changing market interest rates.

ADR See American Depository Receipts.

advances Loans by the Federal Home Loan Bank to its member institutions.

adverse selection Problem of hidden information in general. For instance, the tendency of the most risky people to buy insurance or apply for loans.

advisory fees See management fees.

aggressive stocks Stocks with betas greater than 1.0 that carry greater systematic risk than the market.

agreement corporations Corporations that operate similarly to Edge Act corporations but remain under state charter.

allocative function of interest rates The function of interest rates in the economy whereby they allocate funds between surplus spending units (SSUs) and deficit spending units (DSUs) in the financial markets.

all-risk coverage Property insurance coverage that insures against all losses except those that are excluded.

American Depository ...